Hi Mike, really love your work and think it can very equitably deal with changes in contributions. One thing that I keep wondering though is whether it should not also include a “interest” component. People who put money or time in early should be compensated for their patience to get to a return more than people who put something in just before profitability is reached. What are your thoughts on adding an interest component to each weeks calculation where the current balance of all slices receive an additional percentage amount? That way early contributions are valued proportionally higher the more patient they are. Or is that already compensated through the bigger slices they get in the beginning?
Thank you for sharing your thoughts.
Alexander

Unless it’s a loan, interest is generally not customary. In the Slicing Pie model contributions are weighted using a multiplier. I recommend 4x for cash and 2x for non-cash. This normalizes the contributions and accounts for the time value of money (interest), taxes (cash is post-tax) and scarcity, It’s all built into the model.

I don’t quite get it. Imagine that I put in $100,000 to buy machinery at the start (as that was cash, we’d value it as $400,000). Then over the course of a year we manage to pay all employees at market rates through an additional $100,000 that someone else puts in (so their total slice is worth $400,000 as well). And then we need a last investment of $100,000 for another machine to be profitable. It is put in by a third person 12 months after starting the business. Now we all own 33% even though my initial investment had been at risk for 12 months and the last person’s money for only a day.
Wouldn’t it be fairer to calculate a monthly “interest rate” for each slice to account for the fact that my money had been at risk longer? Each portion of interest could be added to the calculation of the slice.
Or would that be double dipping?
Thank you
Alexander

@mikemoyer:disqus Thank you so much for your great book. I really really enjoy it. We’re starting a JSC company now and we want to make founders be the decision makers (at least for 2 years ahead). How we can achieve that with Grunt Fund?

Hi Mike, Thank you so much for this great book of yours. Its my first time getting into the equity thing and cant explain how easy i felt after reading this book. I asked my partner to read it too so that we both can talk in same language. it makes so much sense and the best part is the more effort you put the more output you get. And thanks a lot for sharing a free copy of the full book as there was no way i could have got it in time otherwise. I was planning to contact a lawyer who would help me in getting this together in legal terms.

Mike: I referred a team I am mentoring to you for a call regarding a complicated agreement with a university. The founder said he has submitted a request using the request a call box to the right but did not get a response. I just wanted to make sure that the function was working on the website. Please let me know how I can make sure we all get on the phone soon. Thanks.

John Elbing

Hi Mike. Great read. Do you know of any lawyers in Switzerland that could help with setting up a grunt fund scheme? Thanks

Hello Mike, a friend turned me onto your slicing pie book and I read it 3 day. Phenominal and solves big problems for me and every startup I’m sure. I’m implementing it right now into two of my ventures with partners. I went to purchase the LLC Agreement on your site and I got the attached message, figured you should know right away, hopefully I’m the only person this bug is happening to. I live in Indonesia so maybe that’s why.

Toni Aran

Hi Mike,

I recently started a festival business with a partner. It didn’t go well and my partner and myself lost $50,000 after year 1. He wants to leave the business for no good reason (quadrant D in your book) but he does not want to take care of the debt which I have agreed to take over. How should that debt be valued? At 4x like the rest of cash? Also, how do you value someone’s remaining equity if the business is in debt ($50,000)? Let’s say they have 7% equity after they forgo their hours, how would we fix a value to that?

Sanada Ryo Leo

Hi Mike. The book was really helpful to talk with my potential co-founder to how to split the equity. I am about to incorporate Delaware C Corp. Looking at the “Lawyers & Contracts”, there seems to be only template for LLC regarding operating agreement. Is there any template for Delaware C Corp? Since my company is a typical tech company in Silicon Valley, I do need to set up my company with that form.

Thanks Mike for the response. I’ll buy it and contactto him. Let me confirm for safety sake. Does the Vesting Agreement alone covers everything that I need? In other words, does the agreement sufficiently help me to implement the slicing pie model as described in the book?